Archive

Not long ago the auto world panicked over the exceptionally high price of used cars. A perfect storm of unfortunate events contributed to a shortage of pre-owned vehicles.

Back in 2007–2008, the U.S. economy took a nosedive. Soon after, American automakers filed for bankruptcy. Then, in early 2011, an earthquake and devastating tsunami in Japan halted production there. Potential car buyers everywhere put purchases on hold. Car leases were all but eliminated, which of course caused a serious shortage of lease returns, typically a major source of quality used cars.

With new car sales at a halt and people holding on to their existing cars for much longer, the prices of late-model used cars were through the roof. In fact, sometimes it was more expensive to buy used than to buy new.

The devastation of Hurricane Sandy is hard to witness. Lost lives and destroyed property put into perspective what is important in life, but they also force us to deal with the effects and consequences of natural disasters.

After we make sure people are safe and the basic infrastructure of our cities is up and running again, we’re eventually going to have to deal with lost and damaged vehicles. A lot of them.

The issue of flooded cars has been covered here before, but after this storm the problem needs to be addressed again. We don’t know how many vehicles were lost in the massive storm, but it’s safe to say more than we can even estimate right now will be totalled out by insurance companies. Unfortunately, many of these flooded cars will be shipped across the country and re-sold. In 2005, Hurricanes Katrina, Rita and Wilma damaged over 600,000 cars. Many of those still come up for sale today.

When dealers chase incentives and sell at a loss, used-car prices take a dive soon afterward.

Certain incentives from automakers, called stair-step incentives, are coming back in a big way. For consumers, that means good deals are available, or will be soon, on many new and used cars. For dealers, it can mean significantly less money if the gamble to offer discounts doesn’t generate enough sales.

Stair-step incentives artificially depress the price of some vehicles while targeting certain other models for which the automaker hopes to boost sales. Do they work? That depends, of course, on who you ask.

In 1944, the United States was in the midst of fighting a world war. Many manufacturing and production resources were devoted to the war effort, leaving other manufacturing to shut down completely. Even new car production was put on hold, with existing stock of autos sold only to those approved by the government.

That put a higher demand on used vehicles and, as you might expect, prices soared. In some cases prices doubled or even tripled from their pre-war levels.

Jumping to modern times, the 2011 state of auto sales is in a much different position. The industry still faces its problems, though, and the past few years have been especially troublesome for new-car inventory. Our country has been at war, our economy is taking punches to the chin and auto manufacturers have dealt with everything from high national unemployment to natural disasters that crippled production and sales.

New car sales are down, used car sales (and prices) are up.

In 1944, the U.S. government’s Office of Price Administration solved the problem of soaring used car prices by imposing a ceiling on them. That’s a nearly unthinkable proposition today, but what if it happened?

My intent today was to write a story about the most stolen vehicles in America. And I’ll get to that.

While researching the story, though, I came across a newscast by AutoNews that said used car buyers are paying as much as $3,000 more than they did just six months ago. Kelley Blue Book similarly reports that used cars are now “more expensive than ever.”

That’s great if you happen to be in the business of selling used cars or have a car you want to unload. But it sucks for car buyers and only makes some vehicles even more appealing to steal.